Kitimat attracts attention as B.C.’s next potential boom town

LNG projects have brought a rush of Alberta investors aiming to stake a claim

Resources, especially the shipment of liquefied natural gas, could turn Kitimat into a boomtown.

Photograph by: handout
, Vancouver Sun

VANCOUVER — These days, when the phone rings at ReMax Kitimat Realty, there’s a good chance there’s an Albertan on the line.

Cited by Census Canada in 2007 as the community with the greatest population decline in Canada, the coastal city of Kitimat is now at the forefront of B.C.’s energy boom. House prices are rising, residential assessments are up 25 to 30 per cent, and investors are noticing.

“About 50 per cent of our buyers right now are from out of town,” said ReMax managing broker Manuel Leite. “Your people from Alberta there, and especially Calgary — we get so many calls from them. They seem to be so positive about what’s happening here in town. Sometimes I think they know more than we do.”

The out-of-town interest is being driven in large part by Kitimat’s economic prospects and speculation about potential multimillion-dollar industrial investments in proposed liquefied natural gas (LNG) projects and the Northern Gateway pipeline, as well as aluminum smelter upgrades that are already underway.

Leite’s records indicate 15 Kitimat properties sold to Calgary buyers in 2012. Properties also sold to buyers from Airdrie, Fort McMurray, St. Albert and Medicine Hat.

“Some of these companies that are planning to come here are actually coming from (the Calgary) area, so whether the news gets out to employees there or whether it’s through some of the articles they’ve read, people are phoning in and saying, ‘We’ve heard this is happening and it’s made us interested,’ ” Leite said.

Leite’s experience is not an isolated one, as several B.C. communities appear poised for an economic windfall. Between natural gas drilling in the north, development of the LNG export trade, and the construction of new electricity generation to power it all, B.C.’s energy sector is booming. A Conference Board of Canada report published in December predicted B.C. should see $181 billion in investment in natural gas between 2012 and 2035 — the highest level in Canada at more than $5.8 billion on average per year.

Much depends on whether the Canadian LNG business develops as hoped. The Conference Board report is based on the assumption four LNG export projects will proceed at a total capacity of 20 million tonnes of natural gas per year. Right now, most companies with proposed projects haven’t even made final investment decisions. But in spite of the fact Canada’s LNG export trade has yet to become a reality, Albertans and Alberta companies see potential in B.C’s “boom towns.”

Calgary-based ATCO Structures & Logistics first got involved in the Kitimat area in 2011, when — in partnership with the Haisla First Nation — it installed an 1,800-person workforce housing camp for the Rio Tinto Alcan aluminum smelter expansion project. Now, it is working with Chevron Canada and Apache Corp. to install an early-stage 340-bed camp for the Kitimat LNG project. If that goes ahead, it will build a 2,500-person housing facility to support construction of the main terminal.

Craig Alloway, the company’s senior director of sales for North America, said ATCO is excited about the opportunities in the Kitimat area.

“We’re definitely engaged …. We intend to maintain our foothold there,” Alloway said. “And because we’re there early, it also provides opportunity for our sister companies within the ATCO group.

“ATCO Power’s a significant player there — they’re currently a preferred partner related to energy power supply for any of the projects the Haisla (First Nation) would be involved in, and we see a lot of opportunities coming out of that.”

Rose Klukas, economic development officer for the District of Kitimat, said it’s not only large companies, but individual entrepreneurs who have been setting up shop in Kitimat. She said in recent months there has been “unprecedented” interest in the community from outsiders, including Albertans.

“We’re seeing Alberta investors come in and see the opportunity that exists here — and some of it lies in retail, small business, or spinoff or secondary industries as opposed to the big projects,” Klukas said.

From the Edmonton-based tea shop that recently opened a location in Kitimat, to the real estate investors from Alberta and Saskatchewan who are busily modernizing Kitimat’s aging apartment buildings to prepare for an influx of workers, Klukas said her office has been a “revolving door” for opportunity-minded entrepreneurs since the fall of 2011.

“The name of our town is now known all over the world. We’re in the media a lot. So for whatever the reason, people identify Kitimat with industrial development and that obviously spins off into these smaller secondary industries or business opportunities,” Klukas said.

She noted that internal studies have indicated Kitimat’s population could grow from 10,000 to 15,000 in just a couple of years — and that doesn’t include temporary construction workers brought in for specific projects.

One thousand kilometres away in the northeast B.C. interior, Fort St. John is also a hotbed for investment. The city calls itself “The Energetic City” and has long been known for its large resource base of oil and natural gas. It already has close links to Alberta, with Calgary-based companies such as Shell, Talisman, and Petronas all present in the community.

Rej Tetrault, operations manager for Shell’s Groundbirch operation in Fort St. John, said the company has been in the community since 2008. In July 2012, Shell opened a new office in Fort St. John that can accommodate 100 people. On a typical day, Shell has 650 contractors in the field.

“Supporting and developing local contractors and businesses is good for our business so we are actively promoting the use of qualified and competitive local and Aboriginal suppliers and contractors,” Tetrault said. “Last year over half of our contractor spend was local.”

Fort St. John Mayor Lori Ackerman — originally from Calgary herself — said there are already many former Albertans who make their homes in the northern B.C. community. She said if B.C.’s LNG export business develops as the province hopes, Fort St. John will become an even more important energy hub.

“A lot of that natural gas will be coming from our area, so that will increase the activity level for an industry we’re already securely involved with,” she said.

Calgary-based WestJet Airlines indicated its confidence in the Fort St. John economy earlier this month when it announced the city would be one of the first two destinations to be served by its new regional airline, Encore.

WestJet spokesman Robert Palmer said it was an obvious choice.

“There’s a very strong business market (in Fort St. John), with workers going back and forth all the time,” Palmer said. “There is a lot of business traffic between Alberta and Fort St. John.”

Ackerman said an analysis by Fort St. John’s economic development committee showed the city’s population of 20,000 could come close to doubling in the next five to seven years if proposed LNG projects and pipelines go ahead.

The Conference Board predicts the Canadian LNG business, if successful, will create 1.2 million person-years of employment and more than $46 billion in tax revenue in B.C. over the next 24 years.

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